United Airlines releases "unconventional" dual performance guidance, still able to maintain annual profitability amid economic recession

According to Zhitong Finance APP, in the face of the uncertainty brought by Trump's tariffs, United Airlines (UAL.US) has taken an unusual step by providing two potential profit scenarios, stating that its outlook for 2025 is still achievable, but also warning that an economic recession could reduce its profit forecast by nearly half. The airline indicated that if the current environment remains stable, it expects adjusted earnings per share to be between $11.50 and $13.50. If the U.S. economy falls into recession, annual profits will drop to $7 per share.

The financial report shows that United Airlines' revenue for the first quarter was $13.2 billion, a year-on-year increase of 5.3%; net profit was $387 million, compared to a net loss of $124 million in the same period last year; adjusted earnings per share were 91 cents, exceeding Wall Street's expectation of 74 cents.

United Airlines' stock price rose 5.2% after regular trading in New York, indicating that the company expects to remain profitable even during economic downturns, which relieved investors. As of Monday's close, United Airlines' stock price has fallen about 32% this year, more than three times the decline of the S&P 500 index during the same period. Its competitors American Airlines and Delta Air Lines also saw gains on Tuesday.

Bloomberg Industry Research analyst George Ferguson stated, "Even in their worst-case scenario, they talked about $2.6 billion in profits." He also added that he had never seen a company provide so many scenario forecasts. "This is already quite a good negative expectation. In my view, this does not seem like a bad environment."

Due to President Trump's tariff policies disrupting consumers, businesses, and markets, the airline industry's lofty expectations for growth and profits this year have been called into question. Last week, Delta Air Lines withdrew its financial guidance for 2025, leading to a "flat" revenue growth expectation due to global trade uncertainty and declining consumer and business confidence. Frontier Airlines' parent company also withdrew its full-year profit forecast due to the sluggish economic environment.

Trump's tariff policies have rapidly shifted—first imposing tariffs on certain countries and goods, then quickly granting exemptions—making it difficult for businesses to accurately predict demand and revenue.

In its investor update report announcing first-quarter financial results, United Airlines stated, "The macroeconomic environment this year cannot be predicted in any confident manner."

Mohamed El-Erian, president of Queens' College, Cambridge University, stated that United Airlines' decision to provide two profit forecasts highlights the importance of "considering multiple scenarios in internal planning rather than just sticking to the conventional."

Despite concerns about demand due to fluctuating trade policies, United Airlines reported that booking volumes remain stable. In the past two weeks, sales of premium cabin seats increased by 17% year-on-year, and international flight sales rose by 5% year-on-year.

United Airlines also stated that adjusted earnings per share for the second quarter will reach between $3.25 and $4.25, while analysts' average expectation is $3.97.

Nevertheless, significant layoffs and border policy adjustments by the Trump administration have led to a decline in domestic flight bookings. United Airlines indicated that it will reduce domestic flights by four percentage points starting in the third quarter and will continue to reduce flights on certain low-demand dates in the fourth quarter. The airline previously stated that it would retire 21 aircraft earlier than originally planned American Airlines is currently observing whether delaying the imposition of certain tariffs can alleviate concerns and avoid a decline in profitable premium and long-haul international flights